Is Argentina ready to do business with China Culturally ?

Post available in: English

Is Argentina ready to do business with China Culturally ?

A Sinologist highlights the enormous importance of culture when it comes to doing business with the world”s second-largest power

The enormous weight of the trade and infrastructure accords Argentina has signed with the People’s Republic of China there is a key factor too often overlooked: culture.

Gustavo Girado, a former adviser to the Agriculture Secretariat under the administration of the late president Néstor Kirchner (2003-2007) says that neither Argentine politicians nor private businessmen are fully aware of the huge importance of this aspect when it comes to doing business with the world’s second-largest economy.

“In general, unlike the West, interpersonal relations are of paramount importance in the Eastern culture. It is slowly-built friendly bonds eventually lead to trade accords, not vice-versa,” he said.

Girado elaborating on a lecture he gave a month ago at the Argentina Exporta Programme, a private think tank that has been in talks with the administration to enhance the diversification of exports.

“The Chinese are a millenary culture. They invented trade and give trade a relevance that we in the West don’t.

“So to speak, it is very difficult to beat a Chinese on the trade field. Our approach of seeking quick gains may eventually work once, but it could never be the basis for a stable relationship,” he said.

In your lecture at Argentina Exporta you highlighted the relevance of political declarations in bilateral relationships, beyond concrete trade accords.

They have plain partners, strategic partners, and, as is the case of Argentina, integral strategic partners, a whole network of relationships that the Chinese have built over time. These are not formal categories but a hierarchy that China builds to cover its need to integrate the 11 million people that each year enter the Chinese labour market. A strategic partnership envisages common development, while an integral strategic partnership includes fields such as culture, sports, technology, defense, etc., which projects the relationship in time far beyond trade.

Are Argentine politicians and the private sector fully aware of the cultural factor relevance?

Not at all. This phenomenon is just emerging in the world. The cultural factor is evident for academics but not for the Argentine public at large. A missionary task must be conducted to raise awareness about this. Decision-makers in special must be convinced of the tremendous importance of this factor. This bond with China will have an influence on Argentine generations to come. If you give any mayoral, gubernatorial or presidential candidate a questionnaire on China you will be amazed at their ignorance on the matter. And we are talking about the second-largest world power.

How was the process whereby Argentina became an integral strategic partner?

Several Argentine heads of state went to China. (The late, former dictator Jorge Rafael) Videla, (former neoconservative President Carlos) Menem, (the late former Radical President Raúl) Alfonsín, and (former Radical President Fernando) De la Rúa. And there were always ostentatious, ‘foundational’ declarations. But while in Argentina each change of government implies erasing everything done by the previous administration, the Chinese remain the same.

They are not a Western-style democracy. It was Kirchner who turned Argentina into a strategic partner in 2004, and (his widow and successor) Cristina Fernández de Kirchner upgraded the bilateral relationship to integral strategic level in a meeting with President Xi Jingping in 2014. With the Kirchners, for the first time, there has been continuity in the Argentine approach to China. Never before there have been such deep and wide-encompassing accords with Beijing.

Is there any risk that category may suffer a reversion if there is a change in the political orientation after October’s presidential election?

Regrettably, there is. And it is not just a subjective view. One of the candidates who is doing well in opinion polls, (Buenos Aires centre-right Mayor Mauricio Macri), whose father is doing extraordinary businesses with China, has been very clear in stating that, if elected president, he will try to review all the accords Buenos Aires has signed with Beijing. He is showing a very, very poor perception of the issue, to say the least.

Which are the main advantages of the accords with China?

To begin with, China is a first-level technological supplier who offers the same technology as the West, with years of grace and post-sale service that the West is no longer providing. Furthermore, Chinese products have state support, with funding and logistics services. Argentina doesn’t have to wrangle over insurance or freight issues. They come as a whole, and that whole has tremendous financial advantages after Argentina has been isolated since the 2001 meltdown and default. For more than a decade now, Argentina has been out of the investment scope of the European Union, basically due to defaults with the Paris Club. Additionally, Argentina has a territorial dispute with Britain, one of the members of the Paris Club. Meanwhile, the US are competitors in the mild-climate agribusiness products and, as a consequence, Argentina has difficulties accessing the US market. Moreover, the US actions against Argentina in the multilateral arena have been evident, basically in the G7. In this scenario, Beijing comes up with strong political support for Argentina in the G20 and in the G77 plus China. Access to military equipment has been prohibited for us for a long time in the West, while this is not the case with China.

Whenever Argentina grows, it faces the problem of hard currency scarcity, which, in the past, was solved through devaluations. This is no longer the case. Now, the way to solve that shortfall is that the country building the infrastructure should finance it. There is no more IMF, no World Bank, no Paris Club, no J.P. Morgan but the ICBC (Industrial and Commercial Bank of China) and China’s four public banks. China means financial opportunities as well as transfer of technology, capital goods and spare-parts. It is now the second-largest investor in Argentina after Chile and Brazil, who alternate in the first place. Brazil is facing economic turmoil and now it is not the first investor in Argentina.

There are many who speak about neocolonialism.

I respect people who draw a parallel between Argentina’s relationship with China at present, and the relationship with Britain in the 19th century. But I fully disagree. There is an enormous distance. Britain was a hegemonic power and the pound sterling was a hegemonic currency, it was a colonial empire and the cradle of capitalism. China is the second power in terms of poverty, and the yuan-renminbi is not the hegemonic currency. The demand for yuans for trade transactions ranks fifth in the world. China still has a long way to go. It is a developing country.

In your lecture last month you mentioned that the accords with China involved some degree of Argentine sovereignty cession in the province of Neuquén.

The Argentine Congress has debated the issue, concluding that there is no such concession. When land is lent over 50 years, no taxes are paid. Many argue it’s tantamount to an embassy and hence a cession of sovereignty. But it is not. The provincial police may enter the premises, but it should do so at (Chinese) request. The high tension line was built by the province and the low tension one by China. The province builds the road and China builds the premises. The complementation is complete.

This said, Argentina is in much better shape to deal with China. For instance, the Land-Ownership Law passed three years ago limited foreign access to land. Brazil doesn’t have a law of that sort. In other countries, the Chinese simply bought the land and displaced the aboriginal population, often sparking environmental problems.

BA HERALD

Post available in: English